Correlation Between Tokio Marine and Wizz Air

Can any of the company-specific risk be diversified away by investing in both Tokio Marine and Wizz Air at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tokio Marine and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tokio Marine Holdings and Wizz Air Holdings, you can compare the effects of market volatilities on Tokio Marine and Wizz Air and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tokio Marine with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokio Marine and Wizz Air.

Diversification Opportunities for Tokio Marine and Wizz Air

0.04

Correlation Coefficient

Tokio Marine  Wizz Air

Significant diversification

The 3 months correlation between Tokio and Wizz is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tokio Marine Holdings and Wizz Air Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wizz Air Holdings and Tokio Marine is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tokio Marine Holdings are associated (or correlated) with Wizz Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wizz Air Holdings has no effect on the direction of Tokio Marine i.e., Tokio Marine and Wizz Air go up and down completely randomly.

Pair Corralation between Tokio Marine and Wizz Air

Assuming the 90 days horizon Tokio Marine Holdings is expected to generate 0.74 times more return on investment than Wizz Air. However, Tokio Marine Holdings is 1.36 times less risky than Wizz Air. It trades about 0.08 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about -0.03 per unit of risk. If you would invest  2,268  in Tokio Marine Holdings on October 7, 2024 and sell it today you would earn a total of  1,235  from holding Tokio Marine Holdings or generate 54.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tokio Marine Holdings  vs.  Wizz Air Holdings

Tokio Marine Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tokio Marine Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tokio Marine is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Wizz Air Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wizz Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tokio Marine and Wizz Air

The main advantage of trading using opposite Tokio Marine and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokio Marine position performs unexpectedly, Wizz Air can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wizz Air will offset losses from the drop in Wizz Air's long position.

The idea behind Tokio Marine Holdings and Wizz Air Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.